STR DSCR Requirements in 2026: LTV, Down Payment, DSCR Floor, Reserves

The core requirements at a glance

• LTV: typically 70–75% (25–30% down); higher LTV needs a stronger DSCR and credit band.
• DSCR floor: commonly 1.0 on the cap-adjusted ratio; no-ratio / sub-1.0 programs exist at a premium.
• Credit: most programs start around 660–680; better bands earn lower rates and higher LTV.
• Reserves: several months of PITIA; more for cash-out and no-seasoning.
• Revenue method: Form 1007 (widely accepted) or a market projection (a subset of lenders).
• Vesting: an LLC is commonly allowed; some lenders prefer personal vesting.

Down payment and LTV in detail

STR programs ask for slightly more down than a long-term-rental DSCR loan — usually 25–30% — because nightly income is more variable. The higher-LTV (lower-down) tier is gated on a stronger cap-adjusted DSCR and a higher credit band. If your ratio is tight, more down is the most direct lever to clear a floor.

The DSCR floor and the cap adjustment

Most lenders want a cap-adjusted DSCR at or above 1.0. The word “cap-adjusted” is doing the work: in a night-capped city we scale projected revenue down to the capped share of an uncapped year before dividing by PITIA. A property that looks strong on the headline number can miss the floor after the haircut — so the cap is part of “requirements,” not an afterthought.

Reserves, seasoning, and insurance

• Reserves — several months of PITIA in the bank; no-seasoning cash-out can require 12+ months.
• Seasoning — measured from the recording date (not closing); see the four BRRRR paths.
• STR insurance — priced higher than a landlord policy and included in PITIA, so it lowers your DSCR.

The revenue-verification methods, ranked by acceptance

Form 1007 (appraisal) is accepted nearly everywhere; a market data projection (AirDNA/Rabbu) is accepted by STR-specialist lenders that allow it; a 12-month operating statement is strongest once you have history. Pick the method your target lenders accept — the engine shows which lenders take which.

Why legality comes before the requirements

None of these requirements matter if the city caps your nights, requires a permit you can’t get, or bans the model — each changes the revenue you qualify on (or whether you qualify at all). That’s why the engine checks legality and applies the cap before it ever computes the DSCR.